JBIC Signs Loan Agreement for Espadarte FPSO Project in Brazil First Project Financing JBIC Provides for Brazilian Project
NR/2005-97
March 31, 2006
March 31, 2006
- Japan Bank for International Cooperation (JBIC; Governor: Kyosuke Shinozawa) signed on March 31, a loan agreement totaling up to US$210 million for financing the Espadarte FPSO*1 Project in Brazil. The loan is cofinanced with Mizuho Corporate Bank (mandated lead arranger), ING Bank N.V., Tokyo Branch, the Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation (SMBC) and Citibank, N.A., Tokyo Branch, with JBIC providing Brazil's political risk guarantee for the portion cofinanced by private financial institutions. This is the first loan JBIC has extended in project financing*2 for a project in Brazil.
- Under this Project, Espadarte MV 14 B.V., where MODEC, Mitsubishi Corporation, and Mitsui & Co., Ltd. have equity interests, will offer FPSO (production capacity: 100 thousand barrels per day; storage capacity: 1.6 million barrels) to the Espadarte Sul oil field, a deepwater oil field (with a depth of 1,350 meters) located 80-100 kilometers offshore Campos in the State of Rio de Janeiro, Brazil. MODEC will provide FPSO for 8 years based on the charter contract with Petrobras, Brazil's state-owned oil company, to produce, process, store and offload crude oil, with Modec Servicos de Petróleo do Brasil Ltda. (Modec do Brazil), a subsidiary of MODEC, operating and maintaining FPSO.
- As oil companies in many countries are aggressively developing offshore oil fields because of the importance of securing energy resources, the FPSO market is expected to expand further. This is the first FPSO project undertaken for Petrobras by MODEC, one of the leading companies of the FPSO business. There are expectations that this Project will open the way for participation in other FPSO projects of Petrobras, who is a major user in the global FPSO market. Other participating Japanese firms are also seeking to strengthen their ties with Petrobras through this Project to expand their business into joint resource development projects and other projects where Petrobras is involved. JBIC is thus supporting their efforts to develop overseas business.
- The Government of Brazil has set the target of becoming a net exporter of oil and oil products by 2006 through increased oil production. Based on this government target, Petrobras is targeting the oil production of 2.3 million barrels per day in 2010 as an important benchmark in business operations. Since the Project plays an important role in achieving this target, this loan is expected to contribute to the Brazilian economy through increased oil production.
- Brazil has abundant energy resources and agricultural crops and boasts the largest economy in Latin America, which attracted attention through its market potential. Japanese firms are also actively engaging in business operations, mainly in the energy and natural resource sector. In May 2005, Brazilian President Lula da Silva paid an official visit to Japan and held a summit with Prime Minister Koizumi on May 26. Following the bilateral summit, the Brazilian and Japanese governments launched "the Joint Program for Revitalization of Economic Relations between Japan and Brazil". The Program called for the promotion of trade and investment, enhanced cooperation for energy and natural resource development, and cooperation for infrastructure development in Latin America. JBIC will continue to cooperate with Brazil in its infrastructure development, export promotion, and energy-related projects, while supporting the projects that will serve Japanese firms in their overseas business development, thereby providing comprehensive support for sustainable economic growth in Brazil.
- *1 FPSO is an acronym for floating, production, storage and offloading. FPSO is a floating oil production system that processes the fluids received from the well by separating oil, water, and gas, and storing and offloading crude oil.
- *2 Project financing is a lending scheme primarily secured through the cash flow generated from the project.
